The impact of house prices on consumption in South Africa : evidence from provincial-level panel VARs

Loading...
Thumbnail Image

Authors

Simo-Kengne, Beatrice Desiree
Gupta, Rangan
Bittencourt, Manoel

Journal Title

Journal ISSN

Volume Title

Publisher

Routledge

Abstract

This paper provides an empirical analysis of the role of house prices in determining the dynamic behaviour of consumption in South Africa using a panel vector autoregression (PVAR) approach to provincial level panel data covering the period of 1996 to 2010. With the shocks being identified using the standard recursive identification scheme, we find that the response of consumption to house prices shock is positive, but short-lived. In addition, we find that a positive shock to house price growth has a positive and significant effect on consumption, while the negative impact of an anticipated house price decrease causes an insignificant reduction in consumption. This suggests that house prices exhibit an asymmetric effect on consumption, with the positive effect following an increase in house prices being dominant in magnitude in comparison to a decline in consumption resulting from a negative shock to house prices.

Description

Keywords

House prices, Consumption, Panel vector autoregression (PVAR)

Sustainable Development Goals

Citation

Beatrice D. Simo-Kengne, Rangan Gupta & Manoel Bittencourt (2013) The Impact of House Prices on Consumption in South Africa: Evidence from Provincial-Level Panel VARs, Housing Studies, 28:8, 1133-1154, DOI: 10.1080/02673037.2013.804492